Fresh $24bn Loan May Push Nigeria’s Debt to N183tn

 

President Bola Tinubu

Firstsitenews-NASS Poised to Approve Tinubu’s Request Amid Rising Foreign Debt, Mounting Concerns Over Debt Servicing

Nigeria’s public debt burden is on course to rise sharply as President Bola Tinubu has sought the National Assembly’s approval to obtain new foreign loans totalling approximately $24.14 billion.

Based on the current official exchange rate of N1,583.74 per dollar, the proposed loans would add about N38.24 trillion to the country’s debt profile, potentially pushing total public debt from N144.67 trillion at the close of 2024 to over N182.91 trillion by 2026.

The breakdown of the proposed borrowing includes $21.54 billion, €2.19 billion, and ¥15 billion. At prevailing exchange rates—€1 at $1.1381 and ¥1 at $0.0068—the euro component converts to around $2.5 billion, while the yen translates to about $102 million. In total, the loans sum up to approximately $24.14 billion, equating to N38.24 trillion at the official rate.

As of December 31, 2024, Nigeria’s public debt stood at N144.67 trillion, according to the Debt Management Office (DMO)—a 48.58% increase from the N97.34 trillion recorded at the end of 2023. This spike was fueled by heavy borrowing and the naira’s significant depreciation against major global currencies.

The weakened currency dramatically raised the naira value of Nigeria’s foreign debt, which grew from N38.22 trillion ($42.5bn) in December 2023 to N70.29 trillion ($45.78bn) by the end of 2024—an 83.89% jump. Likewise, domestic debt rose by 25.77%, climbing from N59.12 trillion to N74.38 trillion.

The Federal Government accounted for N70.41 trillion of this debt, up from N53.26 trillion, while state and FCT debt dropped to N3.97 trillion from N5.86 trillion—signaling more restraint at the subnational level.

If fully approved, the new loans would increase Nigeria’s external debt from $45.78 billion to around $69.92 billion, marking a 52.7% increase. In naira terms, external debt could surge to over N108 trillion.

This proposed borrowing represents a notable expansion relative to the Federal Government’s existing debt portfolio. As of December 2024, total federal debt was N133.33 trillion—comprising N70.41 trillion in domestic debt and N62.92 trillion in external debt. The additional N38.24 trillion would represent a 28.68% increase. Compared to the total national debt, it would raise the overall debt stock by 26.43%.

In a letter to the House of Representatives, President Tinubu explained that the borrowing plan is part of the 2025–2026 rolling plan and is aimed at funding critical sectors such as infrastructure, agriculture, health, education, water, security, and public finance reforms. He noted that the projects under the plan had undergone both technical and economic evaluations and were selected for their potential to boost growth, create jobs, and enhance public service delivery.

In a separate request, the President also asked the legislature to approve a $2 billion foreign currency bond issuance within the local debt market. This bond, under the 2023 Presidential Executive Order on Foreign Currency-Denominated Financial Instruments, is designed to attract local dollar investments, boost foreign reserves, and stabilise the naira. However, it would also increase debt servicing costs, as the bond must be repaid in foreign currency.

Additionally, Tinubu is seeking approval to issue N757.98 billion in bonds to settle outstanding pension liabilities under the Contributory Pension Scheme as of December 2023. The Presidency said this aligns with the Pension Reform Act 2014 and aims to ease hardship among retirees, restore confidence in the pension system, and boost morale among public servants. The bond issuance was approved earlier by the Federal Executive Council.

Combined, the $24.14bn external loan, $2bn bond, and N758bn pension bond could drive Nigeria’s public debt past N182.91 trillion.

Even more concerning is that this estimate does not account for further domestic borrowings expected in 2025 and 2026 to cover budget deficits, nor does it include upcoming debt repayments—raising alarm among economists over the sustainability of Nigeria’s debt trajectory.